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tv   Nightly Business Report  PBS  May 15, 2013 4:30pm-5:01pm PDT

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you by the interactive financial multimedia tools for an ever-changing financial world. our dividend stock adviser guides and helps generate income during the period of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are the go go google, it's one of the hottest blue chips of the year. should you own it?
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will it be the first tech company to hit $1,000 a share? flying high. why airline stocks are taking off along with customer complaints. and hitting the jackpot. powerball fever spreading across the country. and there are 360 million reasons to buy a ticket for tonight's drawing. all that and more tonight on "nightly business report" for wednesday, may 15th. good evening, everybody. a lot of tech news, sort of topping our program tonight. >> yes. some of it very encouraging news from a tech titan tonight. cisco systems reported solid quarterly earnings and revenues after the market closed. the numbers topped analyst estimates and they bought up the stock in after hours. it rose as much as 4%. we have more from the nasdaq with all the details. >> it was for cisco systems on the top and the bottom line, earning 51 cents a share on revenue. up $12.2 billion for the third
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quarter. now ceo john chambers says cisco is operating a at high vel. chambe seemed upat abouthe economy. saying we're starting to see some good signs in the u.s. and other parts of the world which are encouraging. now, shares of it are up after hours but climbed even higher after the company reported an upbeat outlook for the current quarter. susie and tyler? >> thanks a lot. and before those numbers, google was all the talk on wall street today. the stock breaking through $900 a share and the company tried to add to the optimism by rolling out a line of new products at its annual conference for developers. john ford is covering the event for us from san francisco. john? >> yeah, tyler. big, big day for google. stock up better than 3%. on the other hand, rivals apple down more than 3%.
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part of the reason why, one of the big announcements from google was a new music service. google play music all access. the pitch here similar to services like spotify is all the music an google's catalog. app users disposal for $9.99 a month. rolling out in the u.s. first. starting june 30th. what's -- well, if you sign up by june 30th, you get the service for a little bit cheaper. what's interesting about this, there's a radio component to it which competes with folks like spotify and pandora. taking a step back, there was more than just music announced here. google also talked about the service that they want to expand google plus, lots of new photo and video sharing features. and overall, this was not about hardware as much as it was last year. last year we talked more about streaming music through the
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device and this was squarely about services. they rolled out a new version of maps that will be out later in the summer. back to you. >> thank you very much. well, google stock is up almost 30% this year and is on the verge of becoming the first tech company to hit $1,000 a share. so the question for many investors time to buy or sel the stock? joining us now to answer that, paul lemonica and ben shacker the from mcquarry research. so should investors buy, sell or hold? ben you have a target of $925 on shares of google. it's almost there. what would you tell your clients now, buy, sell or hold? >> we still like the stock and there's a lot of momentum behind i. they push the envelope in the things they
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they havthviceand the software and the hardware on top of that. we think the shares can go higher from there. >> i know you don't dislike the stock but you don't see it as a bargain at what $915 a share. of course the history of companies that grow so far, so fast particularly in the tech business is that they sometimes slip and fall later. >> that's definitely true. i do agree with ben 100% that google dominates online advertising right now, but i think investors need to be worried that google right now is eerily like apple back in september of last year. just before the iphone 5 came out, everyone thought apple could do no wrong. it has been a very bloody sell-off. i think part of that could be attributed to the fact that just so many big money hedge funds and institutions owned apple and once they soured on it it was long and winding and now google is a popular hedge fund stock too. i just think it's something
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investors need to be aware of. although it's not predicting any sort of massive sell-off from google any time soon. >> ben, what do you say to that? is google overowned? too much of a love affair with the stock? same thing that happened with apple a year ago? what do you say to that? >> i get concerned when a stock runs this far, this fast. no real change to the fundamentals. however, in this situation i think what is happening is that people are realizing that beyond the advertising, beyond search, beyond display ads there's a whole other part of the business that's developing now, around services and around hardware and around google x. we think a marketplace that will compete with ebay and amazon is coming too. >> this is a very big business, paul. it obviously -- they're dominant in search, they're dominant in online advertising, they have the number one cell phone operating system in the android platform. now they're getting into the music business. they have got a tablet. it feels like the business is
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clicking on all cylinders. you point out the growth rate is something like 15% in profit. the p.e. on 2013 is something like 19. so therein lies a little bit of the rub. but this is a successful, succeeding company, isn't it, paul? >> without question. what i love and admire about google is that it's not a company that's resting on its laurels. it recognizes there's tough competition from apple. from amazon. as ben mentioned that's coming. facebook obviously as well. it would be very easy for google to sit back and relax and say, yay, we're at, you know, $900 a share. $300 billion market value, and wall street loves what we're doing so we don't need to change that. but google has been a company that recently they have shifted management taking the long time head of android, putting him in another position at the company and promoting someone who had been in charge of chrome and having him also in charge of android. i think that shows that this is a company that isn't going to just say yeah, we're doing
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everything exactly as we should be. it's a company that recognizes there's room for improvement even though they are doing extremely well already. i think that's very good to see. >> you know, ben, there's no question here that google is behaving like an innovation machine. listening to a report from jon fortt from the conference, do you think the new product rollouts that he was talking about, are they game changers or the kind of things that are going to power google stock higher or is google getting too much away from its core business of search? >> well, i think on first question of today and the conference, there was not a lot really that will move the needle for going. . music service is a good thing to have. but won't change the numbers fundamentally. going forward, you touch on an interesting point. they're doing a lot of things at are quite different from adveising and quite different from search. the question remains are the things going to succeed? so far, we think they have momentum and are on the right track. it will take some time. >> ben and paul, thank you so
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much. ben shacker the and paul le monica from cnn money. the dow and the s&p closing at record highs, better than expected earnings helping to drive the gains, despite mixed economic reports. new york's manufacturing sector unexpectedly contracted to the lowest level in four months falling to the reading of minus 1.43 in may. industrial production fell 0.5% in april. more than the expected 0.2% decline. but in the end the dow finished up and that's its 20th record close of the year. the s&p rose eight points to 1658 and change and the nasdaq was up nine points to 4731.62. some mixed readings on the housing front. let's start with the good news first. confidence among home builders are up. sales trends are improving. the national association of home builders sentiment index rose to
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44 from 41 in the month of april. the increase in may was the first month to month gain since december. now to the not so good news. applications for mortgages fell 7.3% last week. the reason, rising interest rates. the mortgage bankers association says it's the first decline in more than a month. airline stocks have been elevating lately. up more than a percent today as a group. but as the shares rise, so do customer complaints. phil lebeau joins us from chicago. >> tyler, this is only data that people will look at and say, kind of makes sense. let's start with the department of transportation reporting complaints about airlines for the first quarter. overall, they were up 17.1%. this is on top of the d.o.t. seeing higher passenger complaint rates last year. then a question of unveiled voluntary denied boardings or bumpings. it was 1.06 per 10,000 passengers in first quarter. but look over the last two
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years. it's been steadily increasing. and when it comes to baggage, they mishandle 3.01 bags per 10,000 customers and they announced a few days ago they made $3.6 billion on bag fees last year. oh, by the way when it comes to on time arrivals, overall for the industry it's slipped slightly in the month of march. you see hawaii, virgin america among the top three. overall, it's been off to the race, up 53%. when you look at individual airlines over the last year, alaska airlines up 96% and then you have southwest, delta, u.s. airways, united all posting fantastic returns. the bottom line is this, they're expecting a solid second quarter and that has investors excited. >> all right. phil lebeau, thank you very much. is aig as the bailed out insurance giant on its way to regaining the past glory? we'll take a look as we continue our series come back companies.
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but first, how the international markets closed today. we begin tonight's market focus with pair of companies reaching new milestones. first up, macy's. shares hit an all-time high after they posted a 20% increase. macy's earned $21miion a share. sales up 4% to nearly $6.4 billion. the company also raised its dividend a nickel to 25 cents and said it's going to buy back $1.5 billion worth of its
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shares. shares up 2.5%. to close at $48.57. meanwhile, shares of bristol meyer squibbs are running up to the 52-week high, after a release for the experimental can certain drug. it was the performer in the s&p, up $45 and shares on a tear over the past year up more than 30%. sun power shares were another bright spot today on wall street. the nation's second largest solar panel maker said its profits and sales for the rest of the year would be above wall street estimates. it rose 8.5% to close at $20.65 and up more than 300% in the past year. and that helped lift many of the companies in the solar space, all up strongly with the exception of the biggest one, first solar. but a weak outlook overshadowed better than expected numbers from deere and company. they earned $1 billion in the second quarter on a 9% rise in
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sales, totalme in at nearly $11 billion. but deere which also makes construction equipment cut the full-year sales forecast blaming cooler, wetter spring weather. shares were off about 4.5% today to $89.64. the biggest loser among the s&p 500 companies was come powter sciences. they post a rofit, but sal fell 7% and were shy of expectations. shares down about 10% today to $44.71. but are up nearly 70% over the past year. and aig, this was the poster boy for bailed out companies. it received nearly $200 billion from the government during the financial crisis. today, the company is a slimmer version of what it used to be. and as mary thompson tells us in our comeback company series, aig is still working on regaining its past glory. >> having put aig's turbulent
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past behind it, ceo bob benmosche aiming for a steadier feature. >> i think it's a simpler company, more focused company. so therefore, in my mind, easier to manage. and one that i think is much more secure. >> benmosche engineering a turn around, ridding aig of government ownership. a global property and casualty unit and a sun america. the stocks doubled since 2009. while analyst brian meredith admires the turn around he notes it came at a cost. >> before the crisis, at least in the property casualty insurance and the life industry, aig was viewed as the global leader. and i would say today, it's viewed as one of the leaders, but not the kind of dominant global leader. >> better underwriting and higher rates are helping the business and underpinning a strong first quarter. still, there's work to be done on that business's profitability which lags its peers. analysts say returning those
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numbers key to aig's future success. investors on dividends and buy backs. before they pay a dividend it has to satisfy the concerns of some credit rating agencies and then has to see if the federal reserve becomes the regulator. because the fed will have ultimate approval over any dividend aig does pay. so the government still has some sway over aig. in 2008, the government took a 92% stake in the firm. after aig's securities lending and financial products businesses nearly took it down. aig repaying the $182 billion bailout, selling 27 businesses including an international life insurer and consumer finance units in russia and mexico. stock sales and interest netting a profit of more than $22 billion. now the improving pnc profits key to its returns for the citizen investors. i'm mary thompson. >> tomorrow, we'll look at a familiar food company that saw rapid growth, then a rapid decline and is now rolling in
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dough. coming up, the art of the deal as prices rise for high-end paintings is a bubble about to burst. but first, a look at how treasuri faredoday. not only is the stock market red hot she has days, so is the art market. collectors from across the globe have been bidding up prices, but there are signs that that may be changing. leading some to wonder whether the high end art market may be poised for a fall. robert franks reports. >> prices for the top works of
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artists, auctioned in new york are getting down right surreal. the question is whether the prices can continue. >> $4 million. $25 million. >> top seer at last in addition's south aby's sold for $48.8 million. it's a blue canvas with a simple white line down the middle. that was nearly twice the former record price for a barnett newman. the runner-up was this painting, sold for $37 million. now, some big losers. a francis bacon piece that was expected to sell for $20 million to $30 million failed to sell. now, these uneven results have some wondering whether the art market has become a latest asset bubble that's ready topop. the investment group likened it to gold and said speculation in the art market cannot go on for much longer.
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>> it's 100% a bubble. it has all the new markings of a bubble. prices have gone parabolic. >> so where's the money for all the art coming from? much is coming from the wealthy who have seen their portfolios soar in the stock market. also coming from the newly rich overseas. wealthy collectors from russia and china pouring money into art as a safe and portable store of wealth. >> you have the illegal money or the dirty money. money laundering coming out vast parts of the world where people don't want -- they don't have any place to store the money that's giving a turbo charge to the art market. >> sotheby's said it's proof of strong global demand. one in five of the bidders were new to sotheby's or the category. i'm robert franks. well, tonight brings another high profile art sale, two famo famous paintings by jackson
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pollack are up for auction and each is expected to sell for as much as $35 million. joining us now to discuss that and more is stephen murphy. welcome. a very exciting night ahead for you. >> we're excited. >> before we get to the works on offer tonight, i want to get your reaction to the piece from robert frank. turbo charged. all the markings of a bubble. that's what one is of the sources said. to you agree with that? >> with all respect to the gentleman speaking he's way off the mark. there's a proclivity to draw a trend out of one evening's sale or one lot not being sold. the art market has been on the same curve of growth since before the recession. and before the recession there was a pause. after 2008, it paused. picked up in 2010 and has been growing ever since. the main reason it's growing is that that's a worldwide demand for art. a bubble is when the demand and
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the supply is out of whack with each other. it's been inflated. it's quite the other case with us. there's a scarcity of masterpieces and there's a huge demand for masterpieces and lesser art as well. we did over $6 billion of art sales last year. and while we had a $400 million sale in november for contemporary art, a lot of other art is being sold. >> let me ask you this, mr. murphy. we know that the stock market has been hitting new highs. does the art market work in tandem with that? what's the connection between stock and art? >> it's not close at all. it's part of what i would say to the gentleman on your tape, in fact, when the stock market is a bit down and the art market rises that you people might say that investors are running to the asset of art instead of equities. well, now that the stock market is up, people are still buying more. so what's really happening is the interest in art and the demand for art has gone global.
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it's buyers from russia, china, the emirates. other parts of the far east and u.s. and europe growing. over 25% of our buyers last year were brand new to christy's. we have been selling art since 1766. so i think the idea also comes through in this. at the metropolitan museum of art in november, there was an andy warhol exhibit. 500,000 people went through a short period of time. visiting that art. so there's such a huge surge of interest in art around the world. that's driving the demand. >> there's so much i want to ask you, i know susie feels the same way, but i don't want you to leave us without the viewers seeing the pieces on offer this evening. >> yes. time to bid. >> let's start with the pollack. why is it a signal piece and what you expect to get for it. >> you know, his is a perfect example. the estimate between 25 and
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$35 million. jackson pollack is an establisd and hertified master that's very rare to have a piece like this available. it is a master piece among his masterpieces. it takes an auctioneer and two people to have the bidding go up. it's all transparent. right out there in the open. so i belve since we have a grt deal of interest this should do quite well. >> we have to leave it there. good luck with the sales this evening. stephen murphy of christy's. >> thank you. and finally tonight, what would you do with $360 million? maybe buy some art? a masterpiece. go to hawaii? buy a baseball team? give it to charity? the only thing standing between you and your dreams are six numbers that will be drawn at random in tonight's powerball game. and with people lining up for tickets, hampton pierceson looks at lottery fever gripping the nation. >> it's powerball fever once again. an estimated $360 million jackpot, third largest in history, has lots of dreamers
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looking for the magic six numbers that can change their lives. >> i would pay off my house, pay off my father's house. send my son to the best school in the country and retire. >> and pedro won $300 million. parent of a trend of jackpots getting bigger in shorter amounts of time. more than half of the all time jackpot records have been set in the last three years. among the ones chasing tonight, lisa walters, mayor of battle ground washington. >> the deal with the jackpot being so high is more and more people are buying into it so it raises the pot up a little bit. odds go down a little bit. but i could be that one. >> jurisdictions continue to cash in. total u.s. sales topped $78 billion. another $9 billion in canada. marketing the lottery in search of those revenues is a full-time job. this afternoon inside union
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station, t d.c. tied a preakness horse race in maryland. but the real action was around the corner at this boutique style location. d.c.'s lottery director said the industry is concerned about jackpot fatigue. >> players get used to the large jackpots and it takes higher and higher levels of jackpot to get the same level of excitement. >> so if that's no winner tonight, saturday's powerball jackpot can swell to half a billion dollars. talk about saturday night fever. for "nightly business report" i'm hanson pearson. >> what would you do with it? >> i would pay off my mortgage and endow "nightly business report" with a gratuity. >> i like that. i wish i was as generous. i was thinking of moving to paris. >> okay. anyway, that's "nightly business report" for tonight. i'm susie gharib. thanks for watching. get your powerball tickets. >> i'm going to get one right now. i'm tyler mathisen. have a great evening. hope you see you back here a lot
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richer tomorrow night. "nightly business report" has been brought to you by -- >> the interactive financial multimedia tools for an ever-changing financial world. our dividend stock adviser guides and helps generate income during the period of low interest rates. options profits helps educate beginning and seasoned options traders. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media.
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welcome to "newsline." . it's thursday, may 16th. i'm catherine kobayashi in tokyo. members in tokyo have approved a political resolution that calls for a resolution in syria. despite some holdouts they have condemned the regime of assad said in he's carrying out attacks on indiscriminately on